US shale oil talk: production, prices and forecasts

The production of shale oil in the US was in the center of attention at the virtual round table on "Is a Debt Bomb About to Blow up US Shale?" held on Dec. 16.

David Knapp, Editor of Oil Market Intelligence and Chief Energy Economist and Casey Sattler, Editor of Energy Intelligence Finance and Western Hemisphere News Editor participated in the discussion.

Answering Trend Agency's question regarding the breakeven price for production shale oil in the US, David Knapp said it jumps up and down.

"The breakeven price is above and below. If you do try to put it on the right turf, in terms of separating operating costs from all funding and development costs, which are very different numbers, and you look for a spread for the breakeven prices, this is commonly up and down bar thing," he said.

"Everybody uses the middle, which is the one place where almost nobody is going to be, they're all at the top and the bottom," Knapp said.

Further speaking about the price, Knapp brought up an example.

"There are companies that can operate at $40, they are operating and not losing money," he said. "But [they are] just operating, full funding and development costs in a new well in these areas will probably not be profitable at these prices."

Meanwhile, Knapp said that it is expected that the shale oil production will grow in 2016, and the Gulf of Mexico is a big help for that.

"And some of the shale areas, real shale, we believe, continue to be resilient," he said. "Ultimately, the sweetspots only have so much to give and once you get out of the sweetspots, the productivity is going to decline as well. We might be seeing a decline in 2017, or late in 2016."

Meanwhile, EIA estimates that total U.S. crude oil production declined by about 60,000 barrels a day in November compared with October. Crude oil production is forecast to decrease through the third quarter of 2016 before growth resumes late in 2016. Projected U.S. crude oil production averages 9.3 million barrels a day in 2015 and 8.8 million barrels a day in 2016.